Trading strategies and trading techniques can often be well represented theoretically. However, implementation is not that easy. This is why people increasingly say: If you do it correctly and consistently, almost all techniques can be implemented. But is that really true?
Tip # 1 - What does market technology really say?
Indeed, trading in market technology in particular requires skills other than mere Identify set-ups and develop strategy ideas. The newcomer hopes that the market technology will be a tool that enables a reliable forecast of the prices. He partially misunderstands the nature of market technology: Certain set-ups may indicate an increased probability of the following direction, but many factors can disrupt this direction - and these can also be of a short-term nature.
The word "forecast" is therefore often misleading. If it were just a matter of forecasting, all you had to do was identify a set-up and act accordingly. If it were really that simple, many traders would be rich.
In practice, the identification of the set-up is only part of the planning and analysis. However, the trade itself runs within the framework of many rules, which include have little in common with the set-up, keyword "risk management". Tip # 1 is therefore as follows:
- Market technology only partially provides reliable forecasts. The rest is done by risk management, on which the further rules are based.
Risk management can be handled in different ways. However, it is the essential factor that ultimately decides whether the strategy has stable performance or not. The technical set-up contributed to this only a small proportion.
Tip No. 2 - trading strategies require flexible adjustments
Trading beginners, of course, cannot know because they only know the market that is currently available. But the markets are constantly changing. This is due to the different influencing factors and the global change in these factors.
While traders in the 1970s were only known from face-to-face exchanges and banks, today a large proportion of traders are private and trade via online brokers. The automation of trading programs has also made the markets faster moving and more complex. Information is available faster and can be used just as quickly.
Accordingly, working strategies will reach their limits over time. Traders should never lie on their lazy skin, according to the motto "my system is the only true one that works". There are also enough counter-examples from practice. For example, a look at the automated trading strategies is sufficient. Most of them performed stable for a maximum of two years before things went down faster than everyone wanted. Trading tip no. 2 is therefore as follows:
- It is always important to check why the performance is no longer as stable as in the past.
Profit from movements in currency
Tip No. 3 - Find the markets that can be traded well
One of the skills that good traders bring with them often goes unmentioned: the knowledge of markets that are easy to trade. Of course, this also includes knowledge of the exact times when the selected market can be traded well. Tip No. 3 is therefore as follows:
- Always pay attention to the nature of a particular market.
Many trading beginners search the markets indiscriminately for good set-ups to simply start trading - simply because the set-up looked good. Why this often goes wrong can be found in tip no. 1. The reliability of the forecast varies from market to market. Each asset class has its characteristics that good traders should know and take advantage of.
Conclusion - just a few tips
From the new series "Tips and tricks for that successful trading ", we have presented three tips that are intended to convey that the factors usually mentioned play only a minor role in successful trading. Once traders have understood this, they may be able to steer their learning potential in the right direction earlier and not only learn through a lot of trying and risking.
One should recognize that market technology is often misunderstood as a pure forecasting tool, trading strategies not forever work and that set-ups are differently reliable in different markets. With the broker StockPair, traders can now either test or expand their knowledge using practical analysis and trading.